Justia Civil Procedure Opinion Summaries

The IRS allows affiliated corporations to file a consolidated federal return, 26 U.S.C. 1501, and issues any refund as a single payment to the group’s designated agent. If a dispute arises, federal courts normally turn to state law to resolve the question of distribution of the refund. Some courts follow the “Bob Richards Rule,” which initially provided that, absent an agreement, a refund belongs to the group member responsible for the losses that led to it. The Rule has evolved, in some jurisdictions, into a general rule that is always followed unless an agreement unambiguously specifies a different result. Soon after the bank suffered huge losses, its parent, Bancorp, was forced into bankruptcy. When the IRS issued a $4 million tax refund, the bank’s receiver, the FDIC, and Bancorp’s bankruptcy trustee each claimed it. The Tenth Circuit examined the parties’ allocation agreement, applied the more expansive version of Bob Richards, and ruled for the FDIC.The Supreme Court vacated. The Rule is not a legitimate exercise of federal common lawmaking. Federal judges may appropriately craft the rule of decision in only limited areas; claiming a new area is subject to strict conditions. Federal common lawmaking must be necessary to protect uniquely federal interests. The federal courts applying and extending Bob Richards have not pointed to any significant federal interest sufficient to support the rule, nor have these parties. State law is well-equipped to handle disputes involving corporate property rights, even in cases involving bankruptcy and a tax dispute. Whether this case might yield a different result without Bob Richards is a matter for the court of appeals on remand. View "Rodriguez v. Federal Deposit Insurance Corp." on Justia Law

The Town of Ludlow appealed a Property Valuation & Review Division (PVR) hearing officer’s decision lowering the fair market value of two quartertime-share condominium properties, Jackson Gore Inn and Adams House, located at the base of Okemo Ski Resort. On appeal, the Town argued that the time-share owners in Jackson Gore Inn and Adams House failed to overcome the presumption of validity of the Town’s appraisal. The Town also argued that hearing officer incorrectly interpreted 32 V.S.A. 3619(b) and failed to properly weigh the evidence and make factual findings. After review of the PVR hearing officer’s decision, the Vermont Supreme Court first held that the hearing officer correctly determined that the time-share owners met their initial burden of producing evidence to overcome the presumption of validity by presenting the testimony of their expert appraiser. Second, the Supreme Court conclude that the hearing officer correctly determined that section 3619 addressed who receives a tax bill when time-share owners were taxed but said nothing about how to value the common elements in condominiums. Finally, the Supreme Court concluded the hearing officer made clear findings and, in general, provided a well-reasoned and detailed decision. Accordingly, the decision was affirmed. View "Jackson Gore Inn, Adams House v. Town of Ludlow" on Justia Law

Walter and Mary Van Riper transferred ownership of their marital home to a single irrevocable trust. Walter passed away shortly after transfer of the property to the trust. Six years later, after Mary passed away, the trustee distributed the property to the couple’s niece. In this appeal, the issue presented for the New Jersey Supreme Court was whether the New Jersey Division of Taxation (Division) properly taxed the full value of the home at the time of Mary’s death. Walter and Mary directed that, if sold, all proceeds from the sale of their residence would be held in trust for their benefit and would be utilized to provide housing and shelter during their lives. Walter died nineteen days after the creation of the Trust. Mary died six years later, still living in the marital residence. Mary’s inheritance tax return reported one-half of the date-of-death value of the marital residence as taxable. However, the Division conducted an audit and imposed a transfer inheritance tax assessment based upon the entire value of the residence at the time of Mary’s death. Mary’s estate paid the tax assessed but filed an administrative protest challenging the transfer inheritance tax assessment. The Division issued its final determination that the full fair market value of the marital residence held by the Trust should be included in Mary’s taxable estate for transfer inheritance tax purposes. The Appellate Division affirmed the Tax Court’s conclusion, rejecting the estate’s argument that transfer inheritance tax should only be assessed on Mary’s undivided one-half interest in the residence. The Supreme Court agreed with both the Tax Court and the Appellate Division that the Division properly taxed the entirety of the residence when both life interests were extinguished, and the remainder was transferred to Marita. The property’s transfer, in its entirety, took place “at or after” Mary’s death, and was appropriately taxed at its full value at that time. “In light of the estate-planning mechanism used here, any other holding would introduce an intolerable measure of speculation and uncertainty in an area of law in which clarity, simplicity, and ease of implementation are paramount.” View "Estate of Mary Van Riper v. Director, Division of Taxation" on Justia Law

Before 2008, Cook County ordinances required the Assessor to assess single-family residential property at 16%, commercial property at 38%, and industrial property at 36% of the market value. In 2000-2008, the Assessor actually assessed most property at rates significantly lower than the ordinance rates. In 2008, the Assessor proposed to “recalibrate” the system. The plaintiffs claim that their assessment rates may have been lawful but were significantly higher than the actual rates for most other property owners and that they paid millions of dollars more in taxes in 2000-2008 than they would have if they were assessed at the de facto rates. The taxpayers exhausted their remedies with the Board of Review, then filed suit in state court, citing the Equal Protection Clause, Illinois statutory law and the Illinois Constitution. Years later, their state suit remains in discovery.Claiming that Illinois law limits whom they can name as a defendant, what evidence they can present, and what arguments they can raise, the taxpayers filed suit in federal district court, which held that the Tax Injunction Act barred the suit. The Act provides that district courts may not “enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State,” 28 U.S.C. 1341. The Seventh Circuit reversed, noting the County’s concession that Illinois’s tax-objection procedures do not allow the taxpayers to raise their constitutional claims in state court. This is the “rare case in which taxpayers lack an adequate state-court remedy.” View "A.F. Moore & Associates, Inc. v. Pappas" on Justia Law

Lowe's Home Centers sought reimbursement of state sales taxes and Business and Occupation ("B&O") taxes from the Washington Department of Revenue ("DOR") because it contracted with banks to offer private-label credit cards to its customers, and agreed to repay the banks for losses it sustained when customers defaulted on their accounts. RCW 82.08.050 provided that a seller must collect and remit sales taxes to the State; for sellers unable to recoup sales taxes from buyers, RCW 82.08.037(1) provided that sellers could claim a deduction "for sales taxes previously paid on bad debts." In a split decision, the Court of Appeals affirmed the trial court's denial of reimbursement. After its review, the Washington Supreme Court held that although banks were involved in the credit transaction, Lowe's was still the seller burdened with the loss from its customers' defaults, including their nonpayment of the sales taxes. Accordingly, the Supreme Court reversed the Court of Appeals. View "Lowe's Home Ctrs., LLC v. Dep't of Revenue" on Justia Law

Plaintiff Ventas Realty Limited Partnership (Ventas), appealed a superior court order denying its request for an abatement of the real estate taxes it paid defendant City of Dover (City), for the 2014 tax year. The subject real estate consists of a 5.15-acre site containing a skilled nursing facility serving both short-term and long-term patients, two garages, and a parking lot. At issue was the City’s April 1, 2014 assessment of the real estate at a value of $4,308,500. Ventas alleged that it timely applied to the City for an abatement of its 2014 taxes. The City presumably denied or failed to act upon the request, and Ventas, thereafter, petitioned the superior court for an abatement pursuant to RSA 76:17 (Supp. 2018), alleging that the City had unlawfully taxed the property in excess of its fair market value. Expert witnesses for both sides opined the property’s highest and best use was as a skilled nursing facility. The experts also agreed that the most reliable method for determining the property’s fair market value was the income capitalization method, although the City’s expert also completed analyses under the sales comparison and cost approaches. Both experts examined the same comparable properties and they also used similar definitions of “fair market value.” The main difference between the approaches of the two experts is that the City's expert used both market projections and the property’s actual income and expenses from 2012, 2013, and 2014 to forecast the property’s future net income, while Ventas' expert did not. Ventas' expert used the property’s actual income and expenses for the 11 months before the April 1, 2014 valuation date, without any market-based adjustments. Despite their different approaches, the experts gave similar estimates of the property’s projected gross income for tax year 2014. The experts differed greatly in their estimates of the property’s projected gross operating expenses for tax year 2014. All of Ventas’ arguments faulted the trial court for finding the City's expert's valuations more credible than its own expert's valuations. The New Hampshire found the trial court made numerous, specific findings which were supported by the record as to why it rejected Ventas' expert's appraisal. Accordingly, the Supreme Court upheld the trial court’s determination that Ventas' expert's appraisal failed to meet Ventas’ burden of proof. View "Ventas Realty Limited Partnership v. City of Dover" on Justia Law

The Colorado Title Board set a title for Proposed Ballot Initiative 2019–2020 #3 (“Proposed Initiative”) that reads, in pertinent part, “An amendment to the Colorado constitution concerning the repeal of the Taxpayer’s Bill of Rights (TABOR), Article X, Section 20 of the Colorado constitution.” The Board also ultimately adopted an abstract that states, regarding the economic impact of the Proposed Initiative. A challenge to the Proposed Initiative was presented for the Colorado Supreme Court's review, and after such, the Court concluded the title and abstract were clear and not misleading, and that the phrase “Taxpayer’s Bill of Rights,” as used in the title, was not an impermissible catch phrase. Accordingly, the Court affirmed the decision of the Title Board. View "In re Proposed Ballot Initiative 2019" on Justia Law

In this action brought by Great Lakes Minerals, LLC against the State of Ohio and Joseph Testa, the Supreme Court reversed the decision of the circuit court denying Ohio's motion to dismiss, holding that Ohio was protected by sovereign immunity and that Testa was immune from suit in his official capacity as Tax Commissioner of Ohio and that Testa, in his personal capacity, was dismissed based on the principle of comity.Great Lakes sued Defendants seeking a declaratory judgment that it was not subject to Ohio's commercial activity tax, monetary relief for the forced collection of taxes not owed, and a determination that it would be inequitable to require Great Lakes to defend an action in a foreign state. Ohio unsuccessfully moved to dismiss the complaint. The Supreme Court reversed, holding (1) the State of Ohio and Testa in his official capacity were protected by sovereign immunity; and (2) under the principle of comity Testa is dismissed in his personal capacity. View "State of Ohio v. Great Lakes Minerals, LLC" on Justia Law

Video Gaming Technologies, Inc. (VGT), appeals from the district court's grant of Tulsa County Assessor's motion to dismiss for lack of subject matter jurisdiction. VGT brought a claim for relief from assessment of ad valorem taxes. The Tulsa County Assessor moved to dismiss for lack of subject matter jurisdiction as VGT had not paid the past-due taxes pursuant to 68 O.S.2011 section 2884. The district court granted the motion to dismiss. The Oklahoma Supreme Court determined the underlying question to this case was whether title 68, section 2884 applied to appeals from the Board of Tax Roll Corrections pursuant to title 68, section 2871. The Court concluded title 68, section 2884 did not apply to appeals pursuant to title 68, section 2871: "Timely payment of taxes is not a jurisdictional prerequisite for appeals from orders of the Board of Tax Roll Corrections. The district court erred in finding it did not have jurisdiction." Therefore, the Court reversed the order of dismissal and remanded for further proceedings. View "Video Gaming Technologies v. Tulsa County Bd. of Tax Roll Corrections" on Justia Law

Video Gaming Technologies, Inc. ("VGT") contended the district court improperly granted summary judgment to the Rogers County Board of Tax Roll Collections ("Board"), the Rogers County Treasurer, and the Rogers County Assessor. VGT is a non-Indian Tennessee corporation authorized to do business in Oklahoma. VGT owns and leases electronic gaming equipment to Cherokee Nation Entertainment, LLC (CNE), a business entity of Nation. Nation was a federally-recognized Indian tribe headquartered in Tahlequah, Oklahoma. CNE owned and operated ten gaming facilities on behalf of Nation. The questions presented to the Oklahoma Supreme Court was whether the district court properly denied VGT's motion for summary judgment and properly granted County's counter-motion for summary judgment. VGT argued that taxation of its gaming equipment was preempted by the Indian Gaming Regulatory Act (IGRA) because the property was located on tribal trust land under a lease to Nation for use in its gaming operations. The County argued that ad valorem taxation was justified to ensure integrity and uniform application of tax law. Due to the comprehensive nature of IGRA's regulations on gaming, the federal policies which would be threatened, and County's failure to justify the tax other than as a generalized interest in raising revenue, the Oklahoma Supreme Court found that ad valorem taxation of gaming equipment here was preempted, and reversed the order of summary judgment, and remanded for the district court to enter an appropriate order of summary judgment for VGT. View "Video Gaming Technologies v. Rogers County Bd. of Tax Roll Corrections" on Justia Law